A DYNAMIC GAME OF OPERATIONS AND MARKETING MANAGEMENT IN A SUPPLY CHAIN

Fouad El Ouardighi (), Steffen Jørgensen and Federico Pasin
Additional contact information
Fouad El Ouardighi: Department of Operations Management, ESSEC Business School, Avenue Bernard Hirsch, B.P. 105, 95021, Cergy Pontoise, France
Steffen Jørgensen: Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230, Odense, Denmark
Federico Pasin: Department of Production and Operations Management, HEC Montreal, 3000 Chemin de la Côte-Sainte-Catherine, Montréal (Québec), Canada, H3T 2A7, Canada

International Game Theory Review (IGTR), 2008, vol. 10, issue 04, 373-397

Abstract: The aim of the paper is to study some important differences between (classical) non-cooperative and (modern) cooperative supply chain management. For this purpose, the paper develops a differential game model involving operations and marketing activities that are performed by a manufacturer and a retailer in a simple two-member supply chain. We consider a particular single brand of the manufacturer. The manufacturer decides on production volume, production process improvement and national advertising efforts, while the retailer decides her purchase volume by the manufacturer and her pricing policy toward the final consumers. A revenue sharing contract is employed in the non-cooperative setting. Among the issues addressed on the manufacturer side are the trade-off between production and process improvement activities, the path of inventory over time, and the trade-off between attracting new customers and improving the loyalty of current customers. For the retailer we study the inventory and price evolution over time.

Keywords: Supply chain management; operations; marketing; revenue sharing contract; dynamic games (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (13)

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DOI: 10.1142/S021919890800200X

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